Can the labor pool keep up with demand?
The latest Labor Department figures show the U.S. unemployment rate fell in September to 3.7 percent - the lowest level since December 1969. That's causing challenges for some businesses. But a new survey shows optimism about the economy continues to grow.
Gary Keith, M&T Bank Regional Economist says, the bank's latest Economic Outlook Survey of 500 companies shows the confidence level of midsize businesses is very positive. 55% of the bank's respondents say the economy today is stronger than it was six months ago, and 52% expect it to continue improving over the next six months. But Keith says, there are some potential clouds on the horizon - including the latest unemployment number.
"I think the demand is out there. People are spending, companies are spending. To meet that demand though, and continue to grow, we need a labor force. And to the extent that qualified labor is getting in shorter and shorter supply I think that's a big challenge for businesses." Keith says, one way businesses plan to attract new workers is by increasing wages. But that can be a double edged sword.
"Upward pressure on labor is something the Federal Reserve will be watching like a hawk. And it can lead to wage cost pressures that would be inflationary. So stay tuned. But I think from a day-to-day perspective just meeting that personell requirement that firms have is going to be a very big variable going into 2019." Keith said.
About 1/3 of the companies surveyed plan to add employees by the end of the year. But it also shows 77% of businesses reported having a difficult time finding qualified applicants for open positions.